Abstract

http://ssrn.com/abstract=569109
 
 

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The Demise of Investment-Banking Partnerships: Theory and Evidence


Alan D. Morrison


University of Oxford - Said Business School; University of Oxford - Merton College

William J. Wilhelm


University of Virginia - McIntire School of Commerce

July 2004

Oxford Financial Research Centre Working Paper
AFA 2006 Boston Meetings Paper

Abstract:     
Until 1970, the New York Stock Exchange prohibited public incorporation of member firms. After the rules were relaxed to allow joint stock firm membership, investment-banking concerns organized as partnerships or closely-held private corporations went public in waves, with Goldman Sachs (1999) the last of the bulge bracket banks to float. In this paper we ask why the Investment Banks chose to float after 1970, and why they did so in waves. Our explanation extends previous work which examined the role of partnerships in fostering the formation of human capital (Morrison and Wilhelm, 2003). We examine in this context the effect of technological innovations which serve to replace or to undermine the role of the human capitalist and hence we provide a technological theory of the partnership's going-public decision. We support our theory with a new dataset of investment bank partnership statistics.

Number of Pages in PDF File: 38

Keywords: Partnership, human capital, collective reputation, investment bank, going-public decision

JEL Classification: G24, G32, J24, J41, L14, L22

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Date posted: October 18, 2005  

Suggested Citation

Morrison, Alan D. and Wilhelm, William J., The Demise of Investment-Banking Partnerships: Theory and Evidence (July 2004). Oxford Financial Research Centre Working Paper; AFA 2006 Boston Meetings Paper. Available at SSRN: http://ssrn.com/abstract=569109 or http://dx.doi.org/10.2139/ssrn.569109

Contact Information

Alan Morrison (Contact Author)
University of Oxford - Said Business School ( email )
Department of Finance
Park End Street
Oxford OX1 1HP
United Kingdom
+44 18 6527 6343 (Phone)
+44 18 6527 6310 (Fax)
University of Oxford - Merton College
Merton Street
Oxford OX1 4JD
United Kingdom
+44 18 6527 6343 (Phone)
William J. Wilhelm
University of Virginia (UVA) - McIntire School of Commerce ( email )
Rouss & Robertson Halls, East Lawn
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
434-924-7666 (Phone)
434-924-7074 (Fax)
HOME PAGE: http://gates.comm.virginia.edu/wjw9a/
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